Leveraging Fintech Innovation for the Future of Financial Services

Explaining any currency, even digital currency, is impossible to condense into a short paragraph and do it justice, but we’ll try. There are several types of digital currency. Currently, one of the most well-known is Bitcoin. Simply put, Bitcoin is a digital currency that is built on a technology called blockchain. Bitcoin and blockchain use math and computer science, particularly cryptography, to facilitate transactions of digital assets, and they do it through algorithms that establish indisputable trust. Because Bitcoin is maintained by a peer-to-peer network and does not rely on a central authority like a bank or a government, it is known as a decentralized currency.

In the Bitcoin network, transactions are processed in bundles called blocks, which are validated about every ten minutes. These blocks, which have recorded every Bitcoin transaction and every new Bitcoin created since the currency’s genesis, are chained together in an immutable, sequential, and irreversible fashion to collectively form a public ledger. Many thousands of computing devices, or nodes, work cohesively to verify and process those transactions and update the ledger. Embedded in this protocol is a math puzzle used to verify the integrity of transactions and blocks. Some node operators may decide to commit electricity and computational resources to try to solve this puzzle. If they are the first to succeed, then they will win rewards in the form of new Bitcoin. This is called “mining”.

The inner workings of central banking and fiat currency — think dollars and euros — are also complex and intangible, but we trust and use them without fully understanding them.

While Bitcoin gets most of the attention, I believe blockchain is a true paradigm shift and the use cases are vast. Blockchain could be a force for good, helping us to design alternative models that could redress some of the shortcomings and structural challenges of our finance or banking industries. It enables the digitization and monetization of many types of assets that, when coupled with decentralized finance (DeFi), could unleash a new class of distributed consumer finance. We are already seeing an ever-growing collection of inventive ideas, technological innovations, and solutions coming online. For example, Blockchain is being used to support fair-trade cooperatives and microfinance initiatives. It could completely transform the real estate industry by streamlining costs and creating new, more liquid ownership models. The use cases and industry applications are endless. I’m excited to see crypto and blockchain domains beginning to overlap with innovations in machine learning and artificial intelligence (AI). While there is still a chasm between theory and practice when it comes to blockchain’s promise, I am hopeful that the entire ecosystem and its major players will continue to view constructive collaboration as foundational.

In this day and age, given how technology has evolved, any company, whether it’s established financial institutions, small businesses, or startups, has to become a Fintech company to one degree or another. You’re managing payments; you’re processing transactions; you are offering credit to your customers. Everything from Uber to DoorDash to every application you can think of has a Fintech component. So, finance and Fintech are affecting many other domains and it’s all being driven by technology. As such, understanding Fintech is important to understand how the finance industry and the world will evolve as money is fast morphing from the physical money that you can feel into digital bits.

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